Wind Power Plays

Wind Power Plays

There were a couple of stocks which made huge moves yesterday after some positive comments on wind power plays. MasTec (MTZ, $11.27, up $1.20) has been around for over 75 years and recently announced killer earnings. The stock was at $8 after the announcement and added another 12% yesterday.

I’m going to talk about Broadwind Energy (BWEN.OB, $22.70, up $2.22) in a minute but a want to dig a little deeper on MasTec. We all know that when stocks are mentioned in a positive breath on television they sometimes get a good pop to the upside as everybody is rushing out to buy the stock.

However, the real money was being waged in the option trenches. Take a look at how MasTec’s call options fperformed:

June 10 call (MTZFB, $1.65, up $1.15). Up 230%
July 10 call (MTZGB, $1.75, up $0.85). Up 95%
Jan 12.50 2009 call (MTZAV, $1.65, up $0.40). Up 32%

Not bad for a days work huh? The other thing we know is that normally after a “pop” like yesterday’s there is a chance the stock retreats after the euphoria wears off. But sometimes these “undiscovered gems” (if that’s what you want to call them) can turn out to be one of those “I knew I should have bought that thing at $8!” type deals.

Wind power is gaining popularity and it’s only a matter of time before the “wind revolution” takes hold. The other stock I had mentioned, Broadwind Energy, was up 11% yesterday. However, Broadwind is an “over-the-counter” (OTC) stock meaning it doesn’t trade on the major exchanges. Instead, the stock trades through a dealer network as opposed to an exchange.

OTC stocks can be risky because there are a ton of penny stocks that trade OTC. Broadwind may not fit your typical profile of a penny stock and the company could go on to bigger and better things as well. Or not. That’s for your own due diligence to decide.

I am saying that the reason why these stocks had such a good day was because of their future prospects and the positive comments. And its better to do your research than following the crowd especially when it comes to your options.

Rick Rouse
Rick@OptionsMentoring.com

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